State lacks strategy on alternative energy, report says

The 2020 deadline on using more renewable sources could mean high bills for electrical customers and damage to the environment, study finds.

A worker surveys the site where pylon installation is taking place at Genesis… (Irfan Khan, Los Angeles…)

California's push to add wind and solar energy to its existing power grid could saddle ratepayers with soaring electrical bills and despoil the state's environmental resources unless officials act soon, according to a report released Monday by a government watchdog agency.

Although it applauded the state's effort to reduce reliance on fossil fuels, the nonpartisan Little Hoover Commission said that a "balkanized" and "dysfunctional" collection of state energy agencies threatened to create a "profoundly expensive policy failure."

"The state has failed to develop a comprehensive energy strategy with clearly delineated priorities to ensure that policies are not working at cross-purposes," the report said. "Policies and regulations affecting electricity have been piled upon each other piecemeal, through multiple, sometimes overlapping public processes."

The 107-page analysis, "Rewiring California," outlined the mistakes made during the administration of former Gov. Gray Davis, which resulted in a crisis that sent electricity rates skyrocketing, and warned of the possibility of similar policy errors.

Among other recommendations, the commission urged the governor to establish a single overarching entity or agency to coordinate the state's energy policy.

State officials are not required to act on the group's advice. However, a spokesman said Gov. Jerry Brown would review the report.

The problems described in the report can be traced to California's ambitious legal requirement that the state utilities derive a third of their power from wind, solar and other renewable sources by 2020.

In the rush to incorporate new energy sources, the state has approved 20-year power agreements that lock in "unnecessarily high prices," the report says.

"This sets the stage for a potential ratepayer revolt," the report said.

Commission Chairman David Hancock said the complexity of the issue requires careful policy choices. "Getting it right is far more important than speed," he said.

The commission urged Brown to assess the real cost of the state's energy policies and determine whether they will help achieve the goal of reducing fossil fuel emissions. It also recommended a moratorium on further renewable energy policies.

The commission took note of the environmental effect of the energy initiative. California's deserts are scheduled to host large-scale solar power plants that have been criticized by conservationists.

"Without more careful calibration of these policies, Californians may wind up paying more than necessary for electricity and the state may unnecessarily degrade pristine habitat in its rush to implement renewable energy goals," Hancock said in a statement.

The high price for renewable contracts has been noted by the Division of Ratepayer Advocates, a utility watchdog agency. But the California Public Utilities Commission said newer agreements — which remain confidential for three years — reflect lower costs.

The utilities commission said Monday that it has been working on a forecasting analysis that shows overall rates will increase by 2% to 3% over the next five years — a rise that the agency said was mostly accounted for by infrastructure improvements unrelated to renewable energy.

Many of the report's conclusions were echoed in another recent analysis that looked critically at the state's regulatory maze and how increased renewable energy might complicate California's electrical supply and delivery system.

"Stress in the institutional structure of California's electricity system can already be observed," said a report issued last week by Stanford's Hoover Institution, which is not related to the Little Hoover Commission. "California has 11 programs for renewable power development, with differing goals, timelines and criteria. Electric utilities are forecasting increased costs and rates after decades of relative stability."